Commercial property investing is one of the best niches to focus on when buying income properties. They have a higher potential for profits than residential buildings. Commercial tenants also tend to sign longer leases; three years is often the minimum. Moreover, when it concerns choosing the variety of building to buy, property investors have more options if they decide to buy a commercial property.
But commercial properties also require a great deal of work to make them profitable. Since the tenants in a commercial building are businesses, they have a lower tolerance for inefficiencies in property management. Minor issues in a commercial property can affect the tenant’s operations and impair their ability to carry on their businesses successfully.
As the owner of a commercial property, tenants put the success of their business in your hands when they rent space in your building. How do you manage the premises to ensure an optimal work environment for their staff and the best ambiance for their customers? Although you can supervise a commercial property by yourself, it is more efficient to hire a property manager.
Why is hiring a property manager the best way to operate a commercial property?
7 reasons to hire a commercial property manager
1. Area expertise
Every locality has specific types of businesses that thrive in that location. Commercial property managers know how to evaluate the market where a commercial property is located. They understand the trends driving business activities in that area and the types of tenants who are most likely to flourish in the building. Based on this, a property manager can devise strategies for attracting tenants who are the best fit for a property. That ensures the success of the property and the businesses that operate out of the premises.
2. Superior Property Marketing
Commercial tenants are more difficult to convince than residential tenants. Residential tenants assess their potential home from a subjective point of view; the recentness of its features and the home’s curb appeal. Commercial tenants, on the other hand, are more objective in their assessment of potential business premises. They need a lot more convincing because of how much influence their location has on the success of their business. Property managers know how to market to commercial tenants to get them to rent space in your building.
3. Excellent tenants screening
Screening commercial tenants is a complicated and often protracted process. Landlords will typically ask for a prospective tenant’s tax returns or business financials. Also, they may run credit checks on the business or its principal persons. But this is rarely enough to determine the quality of a prospective tenant. Property managers conduct an in-depth investigation of a potential tenant’s financials to determine the actual state of the business. That helps them avoid renting the premises for a venture that will not meet up with rent payments.
4. Better tenant relationship
Unlike in residential properties, the tenants in commercial properties have very diverse needs based on the requirements of their businesses. The lease agreement you sign with one tenant is often completely different from the terms you agree with another tenant. That imposes different sets of responsibilities on each tenant and makes managing the building difficult. Keeping track of the varying expectations of tenants is one of the main challenges of overseeing a commercial property. But an experienced property manager knows how to balance the conflicting needs of tenants.
5. Efficient property maintenance
When maintaining the systems and structures of a commercial building, there is very little room for error. Businesses in the building expect problems to be dealt with immediately and with minimal disruption to their operations. Experienced property managers have teams of seasoned professionals who know how to keep a building functioning efficiently. Solving maintenance and repair issues in a timely and systematic fashion allows the manager to cut down on the cost of maintenance while still keeping the building in the best shape.
6. Improved cash flow
A good property manager will explore a variety of options to make money from a commercial property. The manager will have systems in place to ensure that tenants pay their rent on time. A seasoned property manager will use automated systems that let them charge a tenant automatically for such things as late fees. The system also alerts the tenant when it is time to pay the rent. That helps to reduce the incidence of delayed rent payments, vastly improving cash flow from the property.
7. Comprehensive financial reporting
Where landlords struggle to track monthly income and expenses, commercial property managers provide comprehensive accounting packages that make it easy to evaluate the success of an investment. They offer reports that include the details of all invoices and make it easy to determine future costs for the building. With this information, landlords can easily monitor their property’s performance.